The Crimes of Mena:

Testimony of William Duncan

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CONTINUED INVESTIGATION OF SENIOR-LEVEL EMPLOYEE MISCONDUCT 
AND MISMANAGEMENT AT THE INTERNAL REVENUE SERVICE:          
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Hearing before the Commerce, Consumer, and Monetary Affairs
Subcommittee of the Committee on Government Operations,
House of Representatives, One Hundred Second Congress,
First Session, July 24, 1991.
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Washington : U.S. G.P.O. : For sale by the U.S. G.P.O.,
Supt. of Docs., Congressional Sales Office, 1992.
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GOV DOC # Y 4.G 74/7:Em 7/16
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The following excerpts are from pages 64-73, 85-86.

Congressman Doug Barnard, Jr. (D-Georgia) was Chairman of the Commerce,
Consumer, and Monetary Affairs Subcommittee in 1991.


   Mr. BARNARD. Thank you very much.
   Our next panel consists of Mr. William C. Duncan, a former IRS senior 
Criminal Investigation employee, and Mr. N. Paul Whitmore, group manager 
of the Criminal Investigation Division of the Internal Revenue Service.
   Gentlemen, we appreciate you again being with us today for this important
hearing. We will include your entire testimony, without objection, in the 
record and would like for your statements, if possible, to be summarized. 
Thank you again for being with us.
   We will first hear from Mr. Duncan. Incidently, I want to congratulate 
you. I understand that you are now gainfully employed again.
   Mr. DUNCAN. I finally got a job; yes, sir.
   Mr. BARNARD. Chief investigator of the Arkansas attorney general's 
office. I am glad that you are now employed.
   Mr. DUNCAN. Thank you, sir. Would it be better if I just responded to 
questions from the panel because it takes about 20 to 25 minutes for me 
to read this?
   Mr. BARNARD. Could you just sort of summarize to begin with? We have 
some questions for you and Mr. Whitmore, but couldn't you just sort of 
summarize what your statement includes?
   Mr. DUNCAN. This was my summary.
   Mr. BARNARD. A 20-page summary.

   STATEMENT OF WILLIAM C. DUNCAN, CHIEF INVESTIGATOR,
   OFFICE OF ATTORNEY GENERAL, STATE OF ARKANSAS

   Mr. DUNCAN. No, sir. It is about 9 pages.
   I can just say that Mr. Whitmore and I have testified truthfully about 
the events that occurred in connection with my testimony before the 
Subcommittee on Crime and my briefing process. We have provided documentation
pertaining to our trips here. We have testified on several occasions, and
we volunteered for and submitted to polygraph exams which we passed. And we
also cooperated with Treasury IG in their extensive investigation. I don't
know what more we can do.
   Mr. BARNARD. Well, we have some questions that we will direct to you.

   [The prepared statement of Mr. Duncan follows]


                          TESTIMONY OF
                        WILLIAM C. DUNCAN
                           BEFORE THE
      SUBCOMMITTEE ON COMMERCE, CONSUMER, AND MONETARY AFFAIRS
              HOUSE COMMITTEE ON GOVERNMENT OPERATIONS
                          JULY 24, 1991
  

Mr. Chairman and Members of the Subcommittee:

Thank you for the opportunity to appear before you today. Since my
testimony before you on July 27, 1989, I have cooperated completely
with investigators from the U. S. Treasury, Inspector General's Office
and Government Accounting Office in an attempt to deal with the
integrity problems and criminal acts of IRS Chief Counsel Attorneys.
To my knowledge, not one of the IRS Attorneys has been punished,
additional IRS Executives apparently have provided false, misleading or
incomplete testimony to Treasury IG Investigators, and the conspiracy
to cover up the illegal acts continues. The system now in place for
investigating Senior Level IRS integrity problems has not worked.

My prior testimony before you related to instructions given to me by
IRS Chief Counsel Attorneys concerning my testimony before the House
Judiciary Subcommittee on Crime on February 26, 1988, about criminal 
investigations in which I participated while assigned as an IRS Special
Agent to the Fayetteville, AR Post-of-Duty. These joint investigations
were initiated because of information which we received during 1983 and
1984 concerning the Barry Seal smuggling organization's move from
Louisiana to the Mena, AR Airport.

By the end of 1987, it was apparent that thousands of law enforcement
manhours and an enormous amount of evidence of drug smuggling, aiding
and abetting drug smugglers, conspiracy, perjury, money laundering and
illegal modifications to smuggling aircraft had gone to waste. Not only
were no indictments ever returned on any of the individuals under
investigation for their role in the Mena Operation, there was a
complete breakdown in the judicial system. The United States Attorney,
Western Judicial District of Arkansas, assured us that there were no
national security or other issues involved which would impede
investigation and prosecution of criminal violations in Arkansas,
however, he refused to issue subpoenas for critical witnesses,
interfered in the investigations, apparently mislead grand juries about
evidence and availability of witnesses, refused to allow investigators
to present evidence to the grand jury, and in general made a mockery of
the entire investigative and judicial process. The Subcommittee on
Crime, through media reports, became aware of public concern over
lack of indictments and requested my testimony.

As you are aware from our testimony and statements made to your
investigators by Hayden Gregory, Chief Counsel for the Subcommittee
on Crime, if I had followed the directives of [deleted] and
[deleted], I would have completely mislead the Subcommittee
about the problems which we encountered in the investigations, and
ultimately would have perjured myself in connection with an allegation
about a bribe from Barry Seal to a high ranking Department of Justice
official. The intense IRS Disclosure Litigation process which we
described was purely and simply designed to impede the Congress of
the United States in their investigation of issues which impact on
the very heart of our judicial system, and ultimately the security
of this country.

Why did this happen? What could have been important enough for the
Department of Justice and the Department of Treasury to join hands
in an effort which resulted in such interference? Perhaps there are
answers. Evidence gathered during the last year and a half indicates
that during the period 1984 through 1986, the Mena, AR Airport was
an important hub/waypoint for transshipment of drugs, weapons and
Central American "Contra" and Panamanian Defense Force personnel who
were receiving covert training in a variety of specialties in the
Nella Community, located ten miles north of the Mena, AR Airport.
The evidence details a bizarre mixture of drug smuggling, gun running,
money laundering and covert operations by Barry Seal, his associates,
and both employees and contract operatives of the United States
Intelligence Services. The testimony reveals a scheme whereby
massive amounts of cocaine were smuggled into the State of Arkansas,
and profits were partially used to fund covert operations. Two
witnesses testified that one of the Western District of Arkansas
Assistant U. S. Attorneys told them that the U. S. Attorney's Office
received a call to shut down the investigations involving Seal and
his associates.

Is this the reason why the IRS went to such great lengths to
cause me to withhold information from Congress? I don't know. It is
obvious that their interference had little to with 6103 or 6E
information. There had to be another reason. Something so important,
that it would cause IRS Attorneys to deny even the meeting during which
the subornation of the perjury occurred.

I have been asked to comment on the Treasury Inspector General's
Office Investigation into this matter. After reviewing unredacted
portions of the investigative report, I can tell you that it contains
many inaccuracies and it should be the subject of intense review by
this subcommittee. The conclusions exhibited in the report allow
criminal violations to go unpunished, and provide fertile ground
for similar violations in the future....

When this subcommittee formally requested my testimony, the pressures
from [deleted], and my immediate supervisor [deleted] increased
dramatically. [deleted] told me not to even call the Little Rock,
AR District Office to inquire as to the location of case files concerning
the Mena Investigations. I was not allowed to either inquire about
the files or return to Little Rock in time to review the
files for information relating to my contacts with the Disclosure
Litigation Attorneys....

It is ironic that the Internal Revenue Service promotes use of
polygraph examinations in conduct of criminal investigations of
American taxpayers because they, along with most other investigative
and intelligence agencies, know that polygraph is an excellent
investigative tool for determination of the truthfulness of
witnesses. Paul Whitmore and I volunteered for, and submitted to,
polygraph examinations administered by the United States Secret
Service, because we were eager, as we told Commissioner Goldberg,
to prove the truthfulness of our testimony. I again challenge
[names deleted] and any other Internal Revenue Service personnel
who dispute our testimony, to take a polygraph so that the truth can
be displayed and this matter put finally to rest.

Unfortunately, Mr. Chairman, it is unlikely that any of the IRS
executives and attorneys who were involved in this matter will ever
take polygraph examinations, and they will probably never admit to
their deception. They know full well that they do not have to submit
to polygraph, and that they have protection within their powerful circle
of co-conspirators who have distorted the truth so many times on behalf
of this organization that they now comfortably perceive the truth to be
whatever the Internal Revenue Service tells them it is. Loyalty is an
important and valued asset. But never, ever, should loyalty be
justification for perjury. History is filled with tragedies resulting
from deception and crimes in the name of loyalty, patriotism and
national security. It seems that most of America keeps their hands over
their eyes, even when it comes to evidence of U.S. Government involvement
in drug smuggling and IRS corruption that erodes voluntary taxpayer
compliance, and ultimately, the very fiscal foundation of this country.
With the exception of a few in depth articles by publications such as the
Boston Phoenix, even the media has refused to demand answers. Please
do not allow this matter to remain unresolved.

The personal cost? The loss of an unblemished federal law enforcement
career and my retirement; emotional and financial trauma beyond
description; my portrayal by IRS Management as someone who turned their
back on their organization, in other words, a traitor; inability to obtain
other federal law enforcement employment because of perceptions that I am a
"whistleblower" and because the Internal Revenue Service withheld
my closing evaluation for over eighteen months....

I am thankful for the Attorney General of the State of Arkansas
who viewed my refusal to perjure myself as a quality which he wanted
in his administration. Otherwise, I might still be unable to find
employment as a criminal investigator. Unfortunately, reprisal against
me for truthful testimony and cooperation with congress continues.
The U. S. Attorney in Western, Arkansas has sent word on two occasions
that his office will not handle any Medicaid Fraud cases for the State of
Arkansas as long as I am on staff with the Medicaid Fraud Division.
In other words, he is willing to allow Medicaid Fraud, which affects
healthcare of the poor and elderly, to go unchecked in the entire western
half of the State of Arkansas, in order to sabotage my first full-time
employment in nineteen months. His actions have caused us to have to
take all of our criminal cases to the Eastern Judicial District
U. S. Attorney, placing an unfair workload on both he and his staff.

How is it that IRS and Department of Justice Attorneys continue this
type of action with no perception of risk. Why are we powerless to
stop it? The Attorney General of the United States should directly
intervene with [deleted] to stop retaliation against me. Mr. Goldberg
should take charge and begin to deal with integrity problems
at the top of his organization. He should also, very quickly arrive at a
solution in order to fully restore my Federal Law Enforcement career,
with full benefits and compensation for the effects of IRS corruption
on me and my family. He should gladly provide Mr. Whitmore and his
family full compensation for any losses which they have incurred, and
allow him to effectively continue to progress in his management career.
People who cooperate with truthful testimony should be promoted, not
demoted. We have fulfilled our responsibilities to the Internal
Revenue Service and Congress under extreme duress. If the Commissioner
of Internal Revenue and the Attorney General refuse to fulfill the
responsibilities of their jobs, they should be replaced with someone
who will.

What can be done to protect IRS Whistleblowers? The first thing you
can do it make sure that whistleblowers are given the guidance and
emotional support which they are going to need to get through some very
tough times. We were totally unprepared for the emotional trauma of
dealing with an enemy which we really didn't understand. How many IRS
Employees know that IRS Attorneys are not there to protect them
individually, but are there to protect the IRS Organization? There
is no Attorney-Client relationship between an employee and an IRS
Disclosure Litigation Attorney. The employee will not even be able
to obtain the briefing records prepared by the attorney. Yet I
was told repeatedly that I had to use the assigned Disclosure
Litigation Attorney, that I had no choice.

Finally, you can insure, that complaints about retaliation are
promptly addressed, and that action is taken to intercede, and
provide immediate relief to the extent possible. People are not
going to willingly expose themselves and their families to economic
and emotional peril, without some assurance that there will be real
support from Congress.

During a portion of the past three years I found myself filled with
feelings of rage, disgust and helplessness as I discovered that I
was powerless to deal with managers within IRS who perceived me as a 
troublemaker, and even a traitor, because I insisted on telling the
truth. I believe that I exhibited the ultimate in loyalty to the
Internal Revenue Service. I did not begin dealing with anyone outside
my organization until I felt that I had exhausted all avenues within the 
organization. I sought guidance from each of my supervisors, who, until
I became involved with this subcommittee, did nothing but encourage me
to go back and go through the same horrifying process again. I feel now
that I have done all that I can do. I despise the corruption that I have
witnessed first hand, but I have had to displace my anger toward the
people who participated in it. I am in the process of trying to
reconstruct some semblance of life and security for my family. It is
my sincere hope that others within the Internal Revenue Service will
read the transcripts of the hearings conducted by this subcommittee and
learn from them.

   Mr. BARNARD. As we begin our interrogation of these two gentlemen, I 
want to thank both of you for coming to the subcommittee to tell your 
story. I think that your testimony in the past has helped us mold an IRS 
of the future that will certainly not tolerate situations like the ones 
that you have experienced, and hopefully ill prevent any retaliation 
against whistleblowers in the future. Mr. Duncan, if IRS had given you 
more latitude in your Justice Department testimony in 1988, would you 
still be an IRS employee today?
   Mr. DUNCAN. I am certain that I would.
   Mr. BARNARD. Why do you believe that?
   Mr. DUNCAN. I thought I had the greatest job in the Internal Revenue 
Service. I thoroughly enjoyed my work, and I enjoyed the coworkers.
   Mr. BARNARD. Where do you think that your investigation would have led?
   Mr. DUNCAN. Well at the time I testified before the Subcommittee on 
Crime, we had just touched the tip of the iceberg, in my opinion. Since 
then we have received additional testimony that there were a lot more 
things going on, there was a lot more money that was being laundered. All 
I wanted to do was to be able to respond truthfully and answer questions 
completely before the Subcommittee on Crime.
   Mr. BARNARD. What has happened to that investigation since you left it?
   Mr. DUNCAN. The IRS investigation? To my knowledge, it has been closed.
   Mr. BARNARD. What about the Justice Department?
   Mr. DUNCAN. The statutes of limitations have expired on the cases and, 
to my knowledge, nothing else will be done.
   Mr. BARNARD. Mr. Duncan, do you believe that the information on the
$350,000 bribe to a high-level Justice official was valid?
   Mr. DUNCAN. That is not a determination for me to make. I can only 
communicate that the law enforcement officer who received that information
told me on numerous occasions that the informant that provided the 
information had provided in the past nothing but good information.
   Mr. BARNARD. Had he ever been tested, as far as a lie detector test is 
concerned?
   Mr. DUNCAN. I am not aware of that.
   Mr. BARNARD. Mr. Duncan, why do you believe that [deleted] and 
[deleted] requested that you not offer this information to the Justice 
Subcommittee?
   Mr. DUNCAN. I have asked myself that question thousands of times. 
Based on the information we have received in the last year and a half it 
appears that things were going on at that airport that could have been 
related to the Contra resupply, I don't know. I perceive that they wanted 
to protect the Internal Revenue Service from anything controversial.
   Mr. BARNARD. What has happened in that particular case since you left, 
to your knowledge?
   Mr. DUNCAN. Information is still coming in, additional witnesses are 
testifying, and we are gathering information right now.
   Mr. BARNARD. Are you associated with that case now as an investigator 
for the Arkansas attorney general?
   Mr. DUNCAN. I receive information and pass it along to the attorney 
general, and also to Congressman Alexander....